CANADA FX DEBT-C$ gains 1/2 cent in range-bound trading

Reuters Staff

3 Min Read

(Adds fresh details, strategist comment, closing rate)
* Canadian dollar at C$1.2228 or 81.78 U.S. cents
* Bond prices lower across the maturity curve
By Solarina Ho
TORONTO, April 22 (Reuters) - The Canadian dollar finished
about half a cent stronger against the greenback on Wednesday,
recouping its losses from the previous session, but a dearth of
market-driving news kept the currency range bound.
The currency surged to levels not seen since January last
week, following better-than-forecast economic data and an
optimistic tone from the Bank of Canada, and has been trading
between C$1.2328 and C$1.2088 this week.
"I think right now the interest rate differentials is really
driving USD/CAD. Because there's no movement there, we're not
really getting any movement in the (currency) rate either," said
Amo Sahota, director at Klarity FX in San Francisco.
The Canada-U.S. two-year bond spread was 12.1 basis points,
while the 10-year spread was -48.4. The two-year spread has
remained relatively steady since last week's events.
"It's going to take some type of event to get us moving
again. It's a pre-Fed week as well ... so that's keeping the
market generally quiet as well," he said.
The Canadian dollar, which was outperforming most
of its key currency counterparts, finished the session at
C$1.2228 to the U.S. dollar, or 81.78 U.S. cents, stronger than
the Bank of Canada's official close of C$1.2281, or 81.43 U.S.
cents on Monday.
Sahota noted that the USD/CAD was pivoting around the
100-day average.
One of the loonie's usual drivers, crude, was also not
demonstrating any significant influencing trend, he added.
Prices were mixed on Wednesday, with Brent closing higher on
renewed conflict in Yemen and U.S. oil falling on higher
inventory. The commodity is an important Canadian export.
Canadian government bond prices were mostly lower across the
maturity curve, with the two-year price down 4.5
Canadian cents to yield 0.670 percent and the benchmark 10-year
falling 53 Canadian cents to yield 1.498 percent.
(Reporting by Solarina Ho; Editing by Leslie Adler)